Vehicle insurance or motor insurance is a type of insurance policy which safeguards you financially in case your vehicle (car or two-wheeler) sustains damages due to natural or man-made calamities such as earthquake, flood, lightning and theft among others. Working of motor insurance is pretty simple.
You pay a certain amount as premium in lieu of which the insurer offers coverage. The premium amount depends on many factors, including the car model, its age, accessories, driving pattern, etc. Read on to know why motor insurance is important in India and its benefits.
What is Motor Insurance?
Motor insurance is a kind of insurance policy that protects you financially if your vehicle (two-wheeler or four-wheeler) gets damaged due to natural or man-made calamities.
There are several benefits of motor insurance, the primary being the monetary compensation paid in case your vehicle gets damaged due to accident, fire, thunder, lightning, flood, riots, etc. It also provides coverage in case your vehicle falls prey to theft.
Types of Motor Insurance
There are three types of motor insurance. They are:
- Third-party Motor Insurance
This type of motor insurance provides coverage against liabilities arising due to damages suffered by a third-party because of your vehicle. To put it otherwise, it provides compensation to the third-party because of injury/death caused by your vehicle.
Third-party motor insurance doesn’t cover damages suffered by you or your vehicle. It is mandatory for every vehicle running on Indian roads to have a third-party motor insurance policy.
- Own Damage Motor Insurance
As the name suggests, own damage motor insurance compensates you financially for the damages suffered by your vehicle in the event of a mishap. It pays for expenses incurred for replacing or repairing damaged parts, including belongings in the vehicle at the time of accident.
- Comprehensive Motor Insurance
A comprehensive motor insurance plan includes the benefits of third-party insurance and own damage policy. Offering 360-degree protection to your vehicle, it offers coverage against a host of perils such as fire, theft, vandalism, riots, flood, lightning, tornado, etc. For end-to-end protection, it makes sense to buy a comprehensive motor insurance plan.
Reasons why Motor Insurance is important
- Offers a financial cushion in the event of a mishap
Motor insurance offers you a financial cushion in case your vehicle is damaged due to accident, earthquake, lightning, floods, etc. Note that getting your vehicle in shape post these events can cost a lot of money. However, things are different with a motor insurance plan.
Also, vehicle insurance reimburses expenses incurred in case you suffer bodily injuries because of an accident. In other words, it compensates for hospitalisation expenses due to an accident involving your vehicle.
- Takes care of third-party liability
This is another reason as to why vehicle insurance is important. It takes care of third-party liability arising due to damages suffered by a third party involving your vehicle.
To put it otherwise, your insurer pays for the treatment incurred by a third-party, thus protecting you from legal litigations.
- Mandatory by law
Any vehicle running on Indian roads has to have motor insurance, especially third-party liability cover. Not having insurance cover can led to a severe penalty. On the other hand, having a motor insurance gives you the peace of mind as you know you have a back up in case your vehicle sustains damages of any kind.
- Coverage in case of death
Death is perhaps the worst possible outcome after an accident. In case you are the sole breadwinner of your family, your untimely demise can throw your family in a financial insecurity. However, the pay-out from a motor insurance policy can help your family stay financially independent and take care of its day-to-day expenses.
Advantages of a Motor Insurance
As evident, vehicle insurance has many benefits on offer. Not only it compensates for the damages suffered by your vehicle but also takes of liabilities due to losses suffered by a third-party. It prevents out-of-expenses in getting your vehicle back into shape and gives your family a financial cushion in case of your untimely demise due to an accident.
You can buy a motor insurance policy, either offline or online. Buying vehicle insurance online can help you compare different policies and choose the one that best fits in your scheme of things. Also, as the insurer saves on various overheads, premiums tend to be low.
Irrespective of whether you buy online or offline, make sure to read the terms and conditions thoroughly. Also, find out the available riders, availing which can offer you and your vehicle a comprehensive coverage.
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